How Permanent Changes to the Tax Code Could Reshape your 2025 Strategy

The recently passed One Big Beautiful Bill Act (OBBBA) brings major changes to the tax code that could directly affect your financial future. From permanent tax rate reductions to expanded deductions and new savings vehicles, this legislation offers both planning opportunities and potential pitfalls, especially for individuals and families with complex financial lives.

At Adams Brown, our strength lies in our integrated approach. As both a wealth consulting firm and a full-service CPA firm, we’re analyzing the full implications of the Act from all angles.

Here’s what you should know right now:

Tax Cuts Made Permanent One of the most significant updates is the permanent extension of the tax cuts originally set to expire at the end of 2025. This includes:

  • Preserved lower tax brackets introduced in the 2017 Tax Cuts and Jobs Act (TCJA)
  • Increased standard deduction: $15,750 for single filers and $31,500 for married couples filing jointly in 2025
  • Permanent Alternative Minimum Tax (AMT) exemption levels, with refined phaseout thresholds

For many of our clients, this creates a more stable foundation for long-term tax planning, income strategy and Roth conversion analysis, especially for those entering or approaching retirement.

Planning Opportunities Worth Exploring

Several new or expanded provisions are likely to open the door for more personalized strategies:

  • Tax Exemption for Tips and Overtime Pay: For workers in eligible industries, the Act introduces a deduction of up to $25,000 for tips and up to $12,500 for overtime income from taxable wages.
  • Expanded SALT Cap: The State and Local Tax (SALT) deduction cap has been temporarily raised to $40,000, with a 1% annual increase until 2029, before reverting to $10,000 in 2030.
  • Senior “Bonus” Deduction: A new deduction has been introduced for taxpayers over the age of 65, applicable for each year from 2025-2028.
  • New Tax-Advantaged Savings Accounts for Young Children: The Act establishes new tax-advantaged accounts for minors under the age of eight, subject to specific restrictions on withdrawals and investment options.
  • Reinstated Charitable Deduction for Non-Itemizers: For tax years following 2025, individuals who do not itemize their deductions can once again deduct qualified charitable contributions. This provision, which allows deductions of up to $1,000 (or $2,000 if married filing jointly), becomes permanent after 2025.
  • Permanent Gift and Estate Exemption Thresholds: The gift and estate tax exemption thresholds, originally from the TCJA, have been made permanent. For 2026, these exemptions will increase to $15 million for single filers and $30 million for married couples filing jointly, up from $13.99 million and $27.98 million, respectively, in 2025.

Beyond these key areas, the OBBBA also includes changes related to:

  • Child Tax Credit: Enhanced provisions designed to benefit more families.
  • Car Loan Interest: Certain car loan interest may now be deductible.
  • Electric Vehicle Credits: Eligibility for these credits has been narrowed.
  • Student Loans: Some borrower-friendly provisions related to student loans have been rolled back.

Legislative changes like these can significantly impact your financial picture. It is imperative to be proactive in your planning for the upcoming tax season. By taking action now, you can effectively optimize your financial strategy and potentially mitigate any negative impacts while maximizing opportunities.

To ensure a comprehensive review of the OBBBA’s impact on your unique situation, we encourage you to schedule a meeting with your Adams Brown Wealth Consultant. Our unique collaborative model means that your financial advisor will bring a dedicated tax professional from our CPA firm to the table to review the specific impacts of the OBBBA on your financial plan. This integrated approach ensures you receive holistic guidance, considering both your wealth management and tax strategies as we help you plan effectively for 2025 and beyond.

As we continue to delve deeper into the specifics of the One Big Beautiful Bill Act, we will provide further updates and resources to help you navigate its implications.

Market Insights

Stocks were mixed last week, battling through tariff talk while responding to upbeat quarterly corporate reports and a trove of updates on the economy.

The Standard & Poor’s 500 Index rose 0.59 percent, while the Nasdaq Composite Index added 1.51 percent. The Dow Jones Industrial Average decreased 0.07 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, skidded 0.46 percent.

Splitting the Difference

Two themes developed with fresh economic data released last week: inflation and consumers.

First, June inflation data painted a mixed picture. While consumer prices rose at a 2.7 percent annual clip last month (faster than May’s 2.4 percent rate), wholesale inflation was flat. So while retail prices were a concern, wholesale prices currently suggest a muted effect from tariffs.

The second theme revolved around consumers, who continued to be a source of strength for the economy. Retail sales recovered in June, and while they were still lower than at year-end, consumer sentiment rose to its highest level since February.

YCharts.com, July 19, 2025. Weekly performance is measured from Monday, July 14, to Friday, July 18. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.

Shipping Traffic to US Nears an All-Time High

Sometimes unconventional indicators can shed some light on what’s happening with the economy.

As you can see, traffic from 20-foot ocean containers is at its highest level since January 2022. That’s a solid rebound from earlier in the year when there were concerns about how the White House’s trade policy would affect shipping.

Over the past few years, inbound ocean containers have seen some big swings caused by various factors, including port congestion, labor issues and supply-chain concerns. We anticipate that the index could bounce around throughout the balance of the year.

What we like about the chart is its unconventional approach to measuring economic activity. Too often, investors get so focused on inflation reports, job updates and Fed meetings that they forget there are other ways to see what’s going on.

 

Sources: CNBC.com, July 3, 2025. “Tax changes under Trump’s ‘big beautiful bill’ — in one chart., FoxBusiness.com, July 4, 2025. “Five major policies to know from the One Big Beautiful Bill Act., TaxFoundation.org, July 2, 2025. “The Good, the Bad, and the Ugly in the One Big Beautiful Bill Act., YCharts.com, July 19, 2025. Weekly performance is measured from Monday, July 14, to Friday, July 18. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points., Knowledge.GoSonar.com, 2025. “Release Notes”